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38
11. Income Taxes
The Group is subject to a number of different income taxes. The statutory tax rates in Japan for the years ended March
31, 2000, 2001 and 2002 were approximately 42% in the aggregate.
The components of income taxes are as follows: Yen U.S. Dollars
(millions) (thousands)
Years ended March 31 2000 2001 2002 2002
Current ¥65,595 ¥134,882 ¥ 35,122 $ 264,075
Deferred (37,216) 5,818 (234,542) (1,763,474)
Income taxes ¥28,379 ¥140,700 ¥(199,420) $(1,499,399)
A reconciliation of the difference between reported total income tax rate and applicable statutory income tax rate for the
years ended March 31, 2000, 2001 and 2002 is as follows:
Statutory Income tax rate 42.0% 42.0% 42.0%
Increase or Decrease in tax rate:
Valuation allowance for deferred tax assets (13.5%) 32.5% (12.0%)
Amortization of goodwill 15.5% 7.5% (1.0%)
Non-deductible expenses for tax purposes 4.6% 2.2% (0.5%)
Realization of equity in earnings of affiliates
from establishment of stock holding trust for
retirement benefit plan —10.1% —
Tax effect to equity in earnings of affiliates, net (9.6%) (3.6%) 0.2%
Tax effect to prior losses of investments in subsidiaries ——6.2%
Other (1.1%) (1.4%) (1.4%)
Reported total income tax rate 37.9% 89.3% 33.5%
The significant components of deferred tax assets and liabilities at March 31, 2001 and 2002 are as follows:
Yen U.S. Dollars
(millions) (thousands)
At March 31 2001 2002 2002
Deferred tax assets:
Tax loss carryforwards ¥272,244 ¥408,961 $ 3,074,895
Accrued retirement benefits 212,258 230,010 1,729,398
Accrued employee benefits 26,041 25,315 190,338
Provision for loss on repurchase of computers 21,580 22,594 169,880
Intercompany profit on inventory and property, plant and equipment
12,389 8,900 66,917
Accrued enterprise taxes 9,942 2,104 15,820
Other 17,654 59,063 444,083
Gross deferred tax assets 572,108 756,947 5,691,331
Less: Valuation allowance (275,703) (223,144) (1,677,775)
Total deferred tax assets 296,405 533,803 4,013,556
Deferred tax liabilities:
Gains from establishment of stock holding trust for retirement benefit plan
¥(213,827) ¥(213,827) $(1,607,722)
Retained earnings appropriated for tax allowable reserves (41,097) (36,616) (275,308)
Unrealized gains on securities (14,740) (8,716) (65,534)
Other (646) (614) (4,616)
Gross deferred tax liabilities (270,310) (259,773) (1,953,180)
Net deferred tax assets ¥26,095 ¥ 274,030 $ 2,060,376
Net deferred tax assets are included in the consolidated balance sheets as follows: Yen U.S. Dollars
(millions) (thousands)
At March 31 2001 2002 2002
Other current assets ¥ 57,233 ¥ 128,987 $ 969,827
Other investments and long-term loans-Others 25,058 158,539 1,192,022
Other current liabilities (95) (600) (4,511)
Other long-term liabilities (56,101) (12,896) (96,962)
Net deferred tax assets ¥ 26,095 ¥ 274,030 $ 2,060,376
FINANCIAL
SECTION